Super funds owned by the big four banks dominate the ranks of fat cats with high fees…and poor performance.

The more you pay for expert advice on how to manage your superannuation savings, the worse your funds perform.

Research by data analyst Morningstar shows that the five worst performing “growth” super funds over the past decade were all owned by one of the big four banks. Three of the worst performers were owned by ANZ and the remaining two owned by CBA and NAB.

The funds returned between 3.6 per cent to 4.8 per cent a year on average.

They include ANZ-owned Optimix Balanced which returned an average of 3.6 per cent a year, ANZ-owned Optimix Growth at 3.8 per cent, ANZ-owned OnePath Managed Growth at 4.4 per cent, CBA-owned Colonial First State Growth at 4.6 per cent and NAB-owned MLC Balanced at 4.8 per cent.

In sharp contrast, the five top performing super funds were all industry or not-for-profit funds with the top performer, CareSuper Balanced delivering an average total return of 7.4 per cent a year over the last decade – more than double the 3.6 per cent annual return delivered by the worst performer, the ANZ-owned Optimix Balanced fund.

The second best performer was REST Core returning an annual average of 7.1 per cent, REST Diversified at 7.1 per cent, Australian Super Balanced at 6.8 per cent and CareSuper Sustainable Balanced at 6.4 per cent.

Despite the poor returns by the bank-owned retail super funds, they continued to charge investors the highest fees. On the other hand, industry funds not only delivered better returns, they also charged much lower fees.

According to data from industry research firm, Rainmaker, retail funds charged ordinary working super investors an average annual fee of 2.01 per cent on their investments in 2016 compared with the average fees of 0.97 per cent to investors of industry funds.

This confirms that one of the major contributing factor for the poor performance of retail funds such as those owned by the big four banks, is higher fees.

There are, of course, other factors at play. Many retail super funds, owned by the big four banks boosted their revenues by paying customers invested in low-risk cash options, interest returns as little as a quarter of the actual market rates.

Regarding the poor performance of the ANZ-owned funds, a spokesman told The Australian newspaper that the funds were “legacy funds” – they were older, higher-fee funds – and the bank had moved the majority of investors out of the funds in the middle of last year. Those who are still in the funds chose to do so.

There are a total of 28 million superannuation accounts in the country holding retirement assets worth more than $2.3 trillion. Retail funds owned by the four banks manage 12.3 million super accounts.